TAKING STOCK: It may be freezing, but take comfort if the lights go out

We've just missed the Ides of March, but power company SSE’s chief executive Ian Marchant sounded a suitably doom-laden note with his warning that there was a ‘very real risk of the lights going out’ unless the Government got its energy act together.

We have less gas storage capacity than Rockall and winter’s renewed icy blast means demand and bills are soaring, but as we all get hypothermia at least we needn’t worry about leaving the lights on.

Marchant was commenting after unveiling plans to cut power generation at five sites.

His line was that regulator Ofgem had underestimated the risk of a worrying reduction in power capacity when it warned last month that power station closures could mean a ten per cent fall by next month.

Ofgem had warned of higher energy prices as spare capacity margins tightened to as low as four per cent from 14 per cent now. But it did not take account of SSE’s plans.

About a fifth of Britain’s power plants are set to close by 2020. These are the older, more highly polluting plants, while operators are also closing unprofitable gas-powered plants that have been hit by the soaring cost of gas.

More...

The Government, naturally, said it was not complacent about these concerns, noting that, unlike other European countries, half of our gas needs are provided by the North Sea and that gas has recently been flowing in from the Continent in high volumes (though not via Belgium’s gas Interconnector, which was out of order last week).

However, for the energy providers, this apocalyptic vision is not necessarily bad news.

After all, look what has happened to SSE – one of the Big Six energy suppliers that dominate the market (but not in an anti-competitive way, of course).

Its share price has risen by about 15 per cent over the past year. In fact it closed on Friday near a year-high of 1486p.

The same is true of Centrica, which supplies electricity and gas through its British Gas and Scottish Gas subsidiaries. Its shares are also up about 15 per cent on the year, closing at 3571⁄2p last week.

Should you wish to invest what little cash you may have left after paying this month’s gas bill, then these are your only options – they are the only British companies among the Big Six. The rest are owned by Spanish, German and French firms.

This week is expected to see the French grab our new nuclear power industry, too, if EDF and the Government can reach agreement on price.

So, if the lights do go out, we can be comforted by the thought that we have paid our Continental allies through the nose to keep them burning over there.